H&R Block Q1 FY26 slides: Revenue up 5%, reaffirms full-year outlook

Introduction & Market Context

H&R Block Inc (NYSE:HRB) presented its first quarter fiscal year 2026 results on November 6, 2025, highlighting a 5% year-over-year revenue increase and significant improvements in EBITDA. The tax preparation company reported better-than-expected results, with its stock rising 1.72% following the announcement, closing at $50.58, though still below its 52-week high of $64.62.

The company’s presentation emphasized its strong start to the fiscal year, with momentum across Assisted Consumer Tax, Small Business Tax, and Wave segments. H&R Block continues to operate in a stable industry with consistent growth, where approximately 55% of tax returns are submitted by tax professionals compared to 45% self-prepared.

Quarterly Performance Highlights

H&R Block reported Q1 FY26 revenue of $203.6 million, representing a 5.0% increase compared to $193.8 million in the same period last year. The company also improved its EBITDA by 9.4% to ($170.0) million from ($187.6) million in Q1 FY25, while net income improved by 3.5% to ($165.4) million.

As shown in the following comprehensive financial performance table:

The revenue growth was attributed to several factors, including higher prior year and amended return volume, increased extension conversions, more small business clients filing entity returns, and strong growth from Wave ProTier and payments volume.

The following slide details these revenue growth drivers:

Operating expenses decreased by 2.7% to $410.6 million, contributing to the improved bottom line. The company’s effective tax rate also decreased from 26.2% to 23.6%. However, earnings per share declined slightly to ($1.26) from ($1.23), while adjusted earnings per share fell to ($1.20) from ($1.17).

Capital Allocation Strategy

H&R Block demonstrated its commitment to shareholder returns during Q1 FY26, returning approximately $455 million to shareholders. The company repurchased 7.9 million shares for $400 million, effectively retiring about 6% of its outstanding shares. Additionally, H&R Block announced a 12% increase to its quarterly dividend in August.

The company’s capital allocation priorities are illustrated in this slide:

Since 2016, H&R Block has returned nearly $5 billion to shareholders through dividends and share repurchases, underscoring its focus on delivering value to investors while maintaining the financial flexibility to invest in strategic growth initiatives.

Strategic Initiatives & Growth Opportunities

H&R Block is targeting significant market opportunities in both consumer tax preparation and small business services. The company estimates the consumer tax preparation market at over 130 million returns filed annually, representing a $20-25 billion opportunity, while the small business segment encompasses approximately 35 million self-employed individuals and small businesses nationwide, representing a potential market exceeding $100 billion.

This market opportunity is visualized in the following slide:

A key strategic focus for H&R Block is prioritizing growth among more complex, higher lifetime value filers. The company has developed a spectrum approach to customer acquisition and retention, focusing investments on segments that deliver the strongest lifetime value.

The company’s strategy for targeting these higher-value segments is illustrated here:

H&R Block is also enhancing its omnichannel experience to meet clients on their terms, offering multiple service delivery options including virtual, face-to-face, Tax Pro Review, MyBlock, AI Tax Assist, and fully digital solutions:

To improve customer experience, the company is investing in innovative solutions for both consumer and small business clients:

These initiatives include "Second Look," which helps new clients recover missed savings from prior returns, and "Spruce," which supports year-round financial wellness. For small business clients, Block Advisors and Wave provide a unified experience designed to expand value delivery.

Forward-Looking Statements

H&R Block reaffirmed its full-year FY26 outlook, projecting revenue between $3.875 billion and $3.895 billion, and EBITDA between $1.015 billion and $1.035 billion. The company expects an effective tax rate of approximately 25% and adjusted earnings per share between $4.85 and $5.00.

The outlook is based on assumptions of approximately 1% industry growth, a healthy balance of volume, price, and mix, growing small business contribution, and opportunistic franchise acquisitions:

The company’s investment thesis remains focused on stable industry growth, national scale and strong brand recognition, and a compelling financial profile. Management expressed confidence in the company’s ability to continue delivering value through its combination of trusted human expertise and forward-thinking innovation.

As tax complexity continues to drive consumers toward assisted preparation services, H&R Block’s strategy of balancing digital innovation with human expertise positions the company to capitalize on market opportunities while delivering consistent returns to shareholders.

Full presentation:

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